Tuesday, May 6, 2014

Glacier Bancorp Annual Shareholders Meeting

Last week we drove up to Kalispell to attend the annual shareholders meeting of Glacier Bancorp (GBCI). Glacier is a holding company of community banks, headquartered up the Flathead Valley, a gateway to Glacier National Park and hence the name.  It is one of our largest stock holdings, a conservatively and well managed company that unlike most all the rest of the banking industry did not accept TARP money from Uncle Sam and never suspended, did not even cut, its dividend during the financial crisis.

We previously blogged on how we came to invest in Glacier in the first place, and commented on some of its stock price meanderings earlier this year.

For some, the most interesting part of the trip likely may be the scenic photos I took on the way up.  I took a less traveled route after cutting up to Helena, from whence I drove on US 12 over the continental divide at McDonald Pass, followed the historic Old Mullan Trail down the valley before cutting north on SRs 141 and 200 before turning off through heavily wooded landscape and scenic lake vistas (many of which were still partially frozen) along SR 83. On the way home, I traversed the southern edge of Glacier NP across to Shelby and then down south through Great Falls and Helena. Here are some of the views.

Pasture and mountains (click to enlarge).

Rustic ranch out buildings (click to enlarge).

A lake and mountain view (click to enlarge).

A meadow and mountain view (click to enlarge).

And a forest and mountain view (click to enlarge).

I checked in at the Hilton Garden Inn the night before the meeting. Walking around I noticed by the placards on meeting rooms they had been occupied that day by Glacier Bancorp functions. As night came on there was a big employee gala in the main ballroom. It seems that Glacier uses the advent of its annual shareholders meeting to gather in and meet with key employees from its 13 bank division in 6 northwestern states.

The next morning the meeting opened promptly at 9:00 am.  The chairman of the board of directors presided over the perfunctory functions of electing the board for another year, ratifying the independent auditor selection and advising the board on the propriety of the company's executive compensation plan. 

Then the CEO took over. Michael Blodnik is an impressive guy -- works without a script, knows everyone's name and personal story, knows the numbers, explains corporate strategy simply and succinctly and offers trenchant comments on the industry, the economic climate and the political environment. He's been in the job since 1998 and has worked for the company since 1978. 

At one point during the proceedings a shareholder asked Blodnik when he planned to retire. He said he hoped to last a couple more years. He continued on to discuss the succession planning shtick, when a director interrupted, indicating that the board had a CEO retention plan -- something about a basement, a dungeon and shackles. The room broke up in laughter.

Blodnik introduced each of the 13 banking division presidents, the 12 senior officers on his corporate staff and announced and introduced all the top level corporate hires and promotions from the last year, all but one of whom was a woman. 

Earlier this spring when GBCI neared its all-time high stock price its market cap exceeded $2 billion, compared to $4.4 million when the bank first went public in 1984.  An investor who put $8,000 in GBCI in 1984 would have seen that grow to a million dollars today.

Blodnik described GBCI as a company of banks, not a banking company, noting it operated 13 independent banks and 118 branches. It has grown from 87 people in 1984 to 1844 people today.

He said the company seeks to grow organically through loan growth, as well as through acquisitions of more community banks. GBCI is helped in this regard by the growing regulatory burden of the Dodd Frank banking legislation (16,000 pages of new rules in 2013) which is drowning in red tape community banks that seek to independently operate.  Blodnik sees lots of opportunity in Washington state, east of the Cascades.  Glacier has pretty much saturated the important markets in Montana.  He would like to grow more in Idaho, but that will be difficult, because consolidation has reduced the number of Idaho banks to eleven. 

I perceived that Glacier Bancorp manages a centralized investment portfolio, directs high level strategy and offers a shared services structure to glean operating efficiencies across its 13 community banks.

We learned that Glacier has 13 banking divisions (read community banks), two added in just the last year.  The holding company remains acquisitive. Small banks throughout the region initiate acquisition discussions because they find it difficult to maintain and finance the legal and compliance infrastructure necessary to address the increasingly burdensome Dodd-Frank regulatory regime. 

Glacier will continue to be acquisitive, focusing on filling holes in its six state service area. They will look for banks in small and medium size cities serving agricultural, rural and exurban customers. 

GBCI is driving increased corporate returns by replacing investments in low yield securities with high return loans.  The low yield investments dropped form 48 percent to 40 percent of total assets in 2013 -- the goal is 20 to 30 percent. After a post financial meltdown period of huge write offs and writes downs, non performing assets have dropped off to a small percentage of total assets. The company's goal is to continuously increase shareholder dividends.

Looking several years down the road, when the company reaches $10 billion in assets, that will trigger limits on debit card interchange fees built into Dodd Frank, courtesy of Illinois Senator Dick Durbin. Blodnik say when GBCI reaches that point they are mindful of the impacts -- the next acquisition then will be very large to make it worthwhile to eat the revenue loss.

Hats off to Glacier Bancorp, they've given our family excellent returns.  And a special hat it is (see below) given as we left the meeting. Cheers!

No comments:

Post a Comment